Introducing CircleUp Credit Advisors

Today we’re excited to announce the launch of CircleUp Credit Advisors, a new affiliate of CircleUp that provides consumer product businesses with the working capital financing they need to grow and thrive.

The Cash Crunch Problem

Since launching CircleUp in 2012, we’ve had the opportunity to work with hundreds of quickly growing consumer product (CPG) companies. For all their variety, we’ve found that they tend to share one common pain point: cash crunches.

Many retailers don’t deliver payments until 30, 60, or even 90 days after they’ve received the items they sell. The delay is compounded by the lead time needed to build and pay for inventory before a product lands on a retailer’s shelf. This means that many consumer product entrepreneurs spend a lot of time in limbo until they get the cash back to pay their supply chain. The better a company does, the bigger this problem becomes: When you’re growing quickly, next month’s shipment is always bigger than last month’s payment.

Now, we can help. Through CircleUp Credit Advisors, approved companies can receive revolving lines of credit backed by their working capital assets, which include accounts receivable (AR), purchase orders (POs), and inventory.

While CircleUp’s existing marketplace and equity divisions provide companies with growth equity capital to execute on bigger picture growth initiatives like hiring and expanding into new product lines, CircleUp Credit Advisors provides the recurring working capital infusions that companies need to boost their sales cycles and get products on shelves faster.

Why We’re Tackling Credit

Many traditional bank lenders won’t even consider providing credit to businesses that are cash flow negative, and often view loan sizes under $1M as too small and high-risk to be worth their time. It is safer for them to market a “small business” credit card, tied to the entrepreneur’s personal FICO score and capped at ~$30K, versus spending the time to truly evaluate the entrepreneur’s underlying business performance and assets. Unfortunately, for growing businesses with revenues in excess of $250K, a small business credit card simply doesn’t move the needle when it comes to easing the working capital cash crunch.

Newer credit offerings from online small business lenders are certainly aiming to address the lack of traditional financing options for early-stage businesses. However, their one-size-fits-all approach to identifying and vetting companies in a variety of disparate industries has meant they fall short when it comes to the consumer product sector.

For example, many early-stage CPG company balance sheets contain valuable accounts receivable (essentially IOUs) from highly creditworthy companies such as Walmart or Amazon. And purchase orders from these retailers are not even accounted for on balance sheets. Without understanding this rich and specialized CPG data, non-specialized online lenders misprice the risk of extending credit to early-stage CPG companies and charge prohibitively high interest rates (often in excess of 40% APRs), impose strict loan size caps, and include large prepayment penalties.

Tailored Solutions for a Unique Industry

At CircleUp, we see things differently. We mean that literally— our internal data science platform Helio allows us to see and understand over one million early-stage consumer and retail brands across the U.S. and automatically evaluate them across a wide variety of product categories, bypassing the need for a protracted loan application and evaluation process. Meanwhile, our years of experience working closely with consumer product businesses has given us a true understanding of the sector, its benefits, and its challenges.

And just like we know the industry, the industry knows us. We’re proud to have built a strong reputation with the CPG community, with more than 17,000 companies having applied to our marketplace platform to raise equity funding over the past five years. Because of our existing industry presence and Helio, CircleUp Credit Advisors benefits from dramatically lower costs to find and evaluate borrowers—and passes those savings onto customers with lower rates.

CircleUp Credit Advisors is in the unique position of being able to efficiently evaluate the true creditworthiness of consumer product brands and provide them with meaningful amounts of working capital at fair terms. No drawn-out due diligence process, no paltry loan offerings, no exorbitant rates. Just the credit that early-stage CPG companies deserve.

Head to circleup.com/credit for more information and to connect with someone from the CircleUp Credit Advisors team.

ABOUT THE AUTHOR:

Asher Hochberg is CircleUp’s Director of Corporate Development, where he manages major strategic initiatives and partnerships with funds and the Credit business division. Prior to CircleUp, Asher spent nearly a decade in investment management across private equity and public-equity disciplines. He was previously a Managing Director at Crestwood Capital Management, a growth-oriented equity hedge fund based in NYC, where he researched and generated investment ideas across variety of industries including financial services, consumer/retail, leisure/travel, media, telecom, and data services. Prior to Crestwood Capital Management, Asher spent over 3 years evaluating private equity investments and working with portfolio companies within the Principal Investment Area (PIA) of Goldman, Sachs & Co. Asher received his AB in Economics from Harvard University with honors.

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On a mission to help entrepreneurs thrive, CircleUp harnesses the power of data to provide capital and resources to emerging consumer brands. Learn how at www.circleup.com/helio
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The UpRound features blog posts, podcasts, and webinars on consumer industry trends, the evolution of private investing, and how to succeed as a consumer entrepreneur, along with general CircleUp news. Your time is valuable — so we deliver the maximum amount of insight in the most concise format.

Important Disclosure: CircleUp.com is a website operated by CircleUp Network, Inc. By accessing this site and any pages thereof, you agree to be bound by its Terms of Use and Privacy Policy. All securities related activity referenced on this site as “marketplace” activities were conducted through Fundme Securities LLC, a wholly owned subsidiary of CircleUp Network, Inc. Fundme Securities LLC is a registered Broker/Dealer and member FINRA/SIPC. Any fund vehicles or fund related activities referenced on this site are separately managed private venture capital funds managed by CircleUp Advisors, LLC, a wholly owned subsidiary of CircleUp Network, Inc. CircleUp Advisors, LLC advisory services are separate and distinct from the marketplace investment platform. All lending related activity referenced on this site are offered through CircleUp Credit Advisors, LLC, a wholly owned subsidiary of CirlceUp Network, Inc. Loans are made by an affiliate of CircleUp Credit Advisors LLC, CIM CU-I LLC. Loans to California-based companies are made pursuant to its California Financing Law (No. 60DBO-69106).